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midday02-14-00's MIDDAY UPDATE

February 14, 2000

Market Data as of 2/14/00, 1:31 PM ET:

o Dow Jones Industrial Average: 10,478.27 up 53.06, 0.51%

o Nasdaq Composite Index: 4,364.22 down 31.23, -0.71%

o S&P 500: 1,381.73 down 5.39, -0.39%

o TSC Internet: 1,128.08 down 26.36, -2.28%

o Russell 2000: 535.48 down 1.62, -0.30%

o 30-Year Treasury: 100 01/32 up 11/32, yield 6.238%

In Today's Bulletin:

o Midday Musings: Dow Continues Modest Snapback as Other Measures Struggle
o Herb on TheStreet: Herb Part 1: Tossing Those Old Blue-Chips in the Trash Community

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Midday Musings: Dow Continues Modest Snapback as Other Measures Struggle


Justin Lahart

Associate Editor

2/14/00 1:17 PM ET

After a halting start, major indices had moved by late morning into positive territory. And then most of them moved out. The

Dow Jones Industrial Average

-- and this is a change -- continued to lead the way, while tech proxies were struggling.

Breadth wasn't so good, and given Friday's decline, today's gains in the Dow qualify as little more than a snapback rally -- and not a very impressive one at that. With a week that includes

Federal Reserve


Alan Greenspan

giving his twice-annual


testimony on Thursday, and a slew of economic data, concluding with the

Consumer Price Index

on Friday, that's not too surprising.

"We're a little confused," said Rob Cohen, co-head of listed trading at

Credit Suisse First Boston

. "I would imagine this is going to be a fairly volatile week. In general, I don't think there are too many trends to get a hold of."

The Dow was lately up 73, or 0.7%, to 10,498.



was helping out the most there, adding 14.58 points to the index.

American Express





were up strongly as well, the latter on oil's flirtation with the $30-a-barrel level.

Oil and oil-services stocks were making out pretty well in general off the latest bump up in crude. The

Philadelphia Stock Exchange Oil Service Sector Index

was up 2.1%, while the

Chicago Board Options Exchange Oil Index

was up a more modest 0.3%.

The broad

S&P 500

was unchanged at 1387.

The tech-heavy

Nasdaq Composite Index

was down 6 to 4390. The

Morgan Stanley High Tech Index

was faring a better, edging barely higher. Internet Sector

index continued to wallow -- as it has all year. It was lately off 17, or 1.5%, to 1138.


Russell 2000

was down 1 to 536.

Though nontech has been outperforming tech today, Wall Street generally sees this as an anomaly -- a good day in a bad year for companies that make things like aluminum and whose stock trades on the Big Board.

"Tech, telecom, biotech is still obviously the place to be," said Peter Boockvar, equity strategist at

Miller Tabak

. "The rest is still in a bear market."

In general, such divergences are not considered sustainable. "Eventually you have to see some broadening, or you have to have a correction in the Nasdaq," said Boockvar. "With the Fed continuing to raise rates, I'm afraid it's going to be a correction in tech rather than the broader market coming back."

That, however, may be more of a concern for the medium or long term rather than the short. It's getting to the point where dip-buyers could come in and bring the market higher, thinks Greg Nie, chief technical analyst at

First Union Securities


"I think what's ahead is a good probability of a trading low this week," he said. "One more miserable close like Friday might get us to an oversold spot." From there, the market could launch something of a sustainable rally -- but it will be important that when it goes up there's a bit better breadth behind it.

"I think the opportunity will be there for the second rally attempt of the year," said Nie.

Market Internals

New York Stock Exchange:

1,328 advancers, 1,545 decliners, 532 million shares. 39 new 52-week highs, 184 new lows.

Nasdaq Stock Market:

1,971 advancers, 2,003 decliners, 954 million shares. 247 new highs, 66 new lows.

For a look at stocks in the midsession news, see Midday Movers, published separately.

Herb on TheStreet: Herb Part 1: Tossing Those Old Blue-Chips in the Trash


Herb Greenberg

Senior Columnist

2/14/00 6:30 AM ET



One question I was asked on last week's


show was whether investors should forget about those old, standard blue-chips. I don't trade these things (or


, for that matter -- I'm a reporter), so before the show I called the best blue-chip investor I know: Fritz Reynolds, who runs the


Reynolds Blue Chip Growth fund, as well as several other funds that invest in nothing but blue-chips. These are low-turnover (how does 5% sound?) and low-cost (when you call you get an answering service), yet Fritz's cornerstone Blue Chip fund was up 51% last year after being up 54% the year before.

How'd he manage that with dowdy old blue-chips? Not all blue-chips are created equal, which is why in this growth-stock environment Reynolds doesn't own the likes of

International Paper





, whose revenues and profits are not showing much in the way of growth. But he does own









(he loves cellular!). He also owns



, and has owned it


where it is today. Like most mutual funds, he doesn't have to have the entire fund in stocks that reflect the name. So, Reynolds tries to find companies that will turn into blue-chips. "I spend a lot of time trying to find medium-sized companies that I can own for 10 to 20 years," Reynolds says.

That's why his Blue Chip fund also includes companies like




Siebel Systems






Commerce One



Juniper Networks



Sycamore Networks



What about the Internet? Sure, which is why he owns













Sun Microsystems



So, what should your takeaway from this discussion be? Don't let anybody fool you into thinking that blue-chips are yesterday's news. Forget about the spread between the


and the


. This is a broad market of stocks, not a market defined by indices. And as for blue-chips, it really depends on your definition.

Lernahooligan alert:

Lernout & Hauspie's


stock gained almost $1 billion in market value last week, propelling it to a new high of 82, after the company announced it was rolling out a prototype of a Palm Pilot-like device that can recognize your voice. Lernout says the device and related software will be on the market by year-end.

So, I rang up Donna Dubinsky, co-founder of

Palm Inc.


and now CEO of


, which has its own Palm-like device called the Visor. What does she think of the likelihood of voice recognition on Palm-like devices? Let's just say her company hasn't spent much time thinking about voice recognition. It was, after all, hard enough to create a technology that could recognize "constrained" handwriting, as in Palm's difficult-to-master Grafitti. One reason for her lack of interest, she says, is the limited memory and power of a Palm device. The only way voice recognition would work on a handheld device, she adds, would be to use an equally new type of language.

Dubinsky hasn't seen the Lernout device, but she says that based on current technology, you can't talk into a Palm device and say, "Call her back and tell her I'd like to meet with her Tuesday at 10 o'clock.' That's not in the near future."

You'd think she'd know!

Lernout officials, who so far have displayed only a prototype -- which, as this column

pointed out, malfunctioned during a demonstration on


-- couldn't be reached for comment. I'd like to offer them an opportunity to demonstrate the new device for me, either at

or some neutral location -- as long as it isn't hooked up to a PC, which has been the case during some demonstrations. If they can show that it works, then I'd say the short-sellers will be in for a world of hurt. If they can't, and if such a non-PC-linked demonstration can't be done, then why introduce the device in the first place?

Be sure to check out Part 2 of Herb on TheStreet.

Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.

Copyright 2000,